Greece Bailout Update

For months, citizens of Greece have been protesting against the possibility of very strict austerity measures being placed upon them. There have been riots that have occurred because of these measures as well as the potential bailout that Greece had requested.

Now, a deal has finally been reached. The eurozone and the International Monetary Fund (IMF) have agreed to supply Greece with €130 billion ($170 billion) in additional bailout loans. The fear was that Greece would default in March without these additional funds. According to the terms of this new program, private bondholders have agreed to take greater losses on their end, while Athens is forced to commit to these very severe but ambitious austerity measures that the citizens have long been against.

These austerity measures including cutting wages, pensions and jobs. Officials are hoping that this new program will get the country started on its long road to recovery. At the very worst, the new program could push the country into even deeper debts and prolong the recession since wages are indeed being cut. Nobody ever said the program would be an easy fix. But the general outlook is optimistic that between the bailout and these cuts, Greece will be able to slowly return its economy to one that can grow again.

In addition to the bailout, Athens is also seeking debt forgiveness from banks and other investors in the sum of €107 billion. This would cause the European Central Bank and other similar banks to lose profits on their holdings. However, this would help Greece to reduce its massive debt. The goal is to cut their debt to 120.5% of gross domestic product by 2020.

It will take significant effort from the Greek citizens as well as the government to get the economy back on a path of growth and recovery.

Now that this bailout deal has been made and the austerity measures have been put into place, the U.S. market is expecting the stocks to rise. The market has been strong lately in anticipation of Greece's deal and the hope is that the market will continue in this way.

Posted in: bailout,eurozone,Greece,IMF,stock market